Verstandig partners up in bid for Md. tracks

Posted: 7:22 pm Mon, November 2, 2009
By Liz Farmer
Daily Record Business Writer 

The first round of bids for Maryland’s thoroughbred race tracks were submitted Monday, including a proposal from a group made up of race track operators and a local developer.

Bankrupt Magna Entertainment Corp., which put its Maryland properties back on the auction block last month, will announce its “stalking horse” bid, or an initial offer that competitors can bid against, on Nov. 9. Miller Buckfire, the New York firm handling Ontario-based Magna’s assets auction, is not releasing the number of bids entered by Monday’s deadline nor the names of the preliminary bidders.

But Pikesville developer Carl Verstandig, who had expressed his interest in buying Maryland’s tracks in the past, said Monday he joined in a bid submitted by two out-of-state track operators. He would not reveal the names of the bidders but said they operated tracks and had gaming operations around the country and would likely be interested in bringing slots to Laurel Park if possible.

Verstandig, who had originally planned to submit his own bid, said he has agreed to pay the group $38 million for the land around Laurel Park and Pimlico Race Course to develop into office and mixed-use retail space. The out-of-state group would operate the two Maryland tracks and keep the Preakness Stakes in Maryland, as required by Magna’s auction procedures.

The group’s bid also includes Magna’s other assets that were recently put back on the auction block, including two racetracks in California and a track in Florida.

“This would give me what I want without having to go ahead into a business that isn’t really my expertise,” said Verstandig. “They do this for a living. I think it’s going to be a very competitive bid.”

Magna, which filed for bankruptcy in March and placed its Maryland assets (Laurel, Pimlico and the Bowie Training Center) up for auction at that time, originally took those properties off the auction block in May.

Baltimore developer David Cordish has also expressed his interest in bidding on Magna’s Maryland properties but a spokeswoman for Cordish Cos. did not return requests for comment.

Joseph De Francis, a former owner of Laurel and Pimlico, said he did not submit a bid because he felt the three weeks Magna had given interested parties to submit their bids was too short to submit a competitive bid. However, a second deadline on Dec. 4 for bidders who want to bid against the selected stalking horse bid is not out of the question.

“We’ll be looking very closely at that,” De Francis said.

Meanwhile, De Francis is fighting a motion by Magna to terminate a profit-sharing agreement made in 2002 when his family sold controlling interest in Laurel and Pimlico to the company. That deal entitles De Francis, his sister Karin and others to 65 percent of any pre-tax, future profits the company receives from slot machines if the games are ever approved for the tracks. After five years that number drops to 50 percent for another five years, then 40 percent for the last 10 years of the agreement.

That deal would apply to any future owner of the track as well, De Francis said.

“The possibility of conducting gaming sometime in the future at either Pimlico or Laurel was one of the assets of the tracks, just like land is an asset,” De Francis said. “At the time it was an asset that was very difficult to evaluate in terms of calculating a sale price. Rather than putting a value on it in dollars, [we reached] a series of agreements that were fair to both sides.”

Magna claims the agreement “places a considerable cloud” over the amount prospective buyers may want to invest in gaming at Laurel Park. Officials have said gaming at Laurel could still be a possibility if Cordish’s bid for a license to operate slots near the Arundel Mills mall falls through.